A Princeton-based mother-daughter trio has won $2 million from Merrill Lynch in what is billed as the largest amount awarded for a discrimination case from any National Association of Securities Dealers arbitration panel. Audrey Gould and her daughters, Georgeanne Moss and Ellen Baber, say they were forced out of the Merrill Lynch offices on Nassau Street in November, 2000. They now operate as the Gould Group at Wachovia Securities (formerly Prudential).
In the complaint filed in 2003 the Goulds named Richard Hyldahl, Jack Haraburda, and Michael Pron as among the contributors to discriminatory practices, which the Goulds said included failure to provide access to walk-in customers, depriving them of sufficient support staff, and defamation.
On November 10 the three-man NASD panel awarded $1 million to Audrey Gould, $500,000 to Moss, and $150,000 to Baber, plus $330,000 in fees and other costs to the Goulds’ Chicago-based law firm, Stowell and Friedman. "It is the NASD’s highest award for discrimination that we are aware of," said attorney Mary Stowell in a telephone interview. She and Linda Friedman represented the Goulds in the hearing that began in Philadelphia last February and involved 12 days of testimony.
"We believe the men were coveting the book of business," says Stowell. "After they left their manager got $100 million of their assets."
The discrimination "started with insuring they didn’t have adequate sales assistant support," says Stowell, "and continued by interfering with relationships with clients, sending out letters to clients without advising the Goulds, hyper surveillance with compliance/regulations – a whole pattern of harassment. This is one of the better cases we have tried."
"Merrill Lynch still does not believe the Goulds were illegally driven from the company," says Stowell. "Merrill Lynch would say nothing untoward was done toward the Goulds, that mistakes might have been made but they were not intentional or malicious."
The NASD regulates brokerages and dealers. Mark Herr, Merrill Lynch spokesperson, points out that just because the NASD makes an award does not mean that the allegations were proven or accepted as true. "We respectfully disagree with the panel’s ruling but respect the process," says Herr. "We do not tolerate discrimination at Merrill Lynch."
Merrill Lynch has more than 14,000 financial advisors, says Herr, and 15 percent of them are women. Nine hundred women, out of a potential pool of 2,800 women, filed claims as part of a class action discrimination lawsuit in the 1990s. "The overwhelming, vast majority of the 900 cases have been resolved, almost all of which were resolved without arbitration," says Herr.
The Gould Group was the subject of a U.S. 1 cover story on December 6, 2000, just after the Goulds had left Merrill Lynch. At that time they declined to say why, only that Prudential had offered "a tremendous amount of support in terms of our client needs."
Audrey Gould’s first career had been in orthoptics, the diagnosis and management of disorders of vision problems. She and her husband, a pediatrician turned psychiatrist, had two daughters, and when they went off to college she fulfilled her long-held ambition of moving into financial services. Hired by Merrill Lynch as a financial consultant at age 49, she initiated a series of lunchtime financial seminars, teaching investing basics to retirees, university employees, and anyone else interested in a sandwich, a soft drink, and the mechanics of a stock or a bond.
Her daughter, Moss, graduated from Barnard College and the Benjamin Cardozo School of Law and was a senior attorney at Merrill Lynch when she joined her mother on the retail side. At the time she left Merrill Lynch, she and her husband, also an attorney, had an eight-month old son.
The other daughter, Baber, went to Trinity College in Connecticut and worked on Wall Street before joining her mother and sister to form the Gould Group. She and her husband have two school-age children.
On the subject of administrative support, the complaint said that women financial advisors received less support than men because Merrill Lynch assumed that women could take care of their own clerical duties. The Goulds contend that, based on bringing in about $4 million in business, they should have been assigned four assistants in 1999. They had only two.
Then, when Moss was eight months pregnant, the Goulds’ more experienced assistant was assigned, without notice to the Goulds, to work for the branch manager. Meanwhile their remaining assistant was due to go on maternity leave. Neither assistant was replaced. "The Goulds were forced to service their book of business, which by this time was annualizing $4.5 million in production, without administrative or managerial support," said the complaint. "You cannot run a business the size of the Goulds’ without an adequate assistant," says Stowell.
Regulatory harassment began in 1999 during a bull market and the Goulds left in November, 2000, when the stock market was "getting more challenging," says Stowell. The Goulds had a "transaction-based" business, a very labor-intensive business model, where the financial advisor personally enters the trades, she says. Brokers are usually notified if letters go out to clients asking if they were aware that they had been transferred from one type of fund to another type of fund. But the Goulds were not notified.
"It was a way of undermining client confidence," Stowell claims.
Other discriminatory acts named in the complaint might seem petty. At one point, according to the complaint, the Gould Group’s manager took the group’s file cabinets for his own use, so they were forced to store client files under a desk. Friedman termed these kinds of actions "death by 1,000 paper cuts."
At the hearing, the Goulds’ attorney described how Audrey Gould served lunch – tuna fish sandwiches – to potential clients. Said Friedman: "When they were forced out of Merrill Lynch, they lost their accounts they had acquired, tuna fish sandwich by tuna fish sandwich."
The Gould Group/Wachovia Securities, 138 Nassau Street, Princeton 08542; 609-688-9672; fax, 609-683-5321.